Though it has identified roughly $116 million in federal aid for property owners rebuilding or elevating homes after hurricanes Katrina and Rita that may have been misspent, the state agency in charge of the Road Home program has failed to recover any of that money, according to a state legislative auditor's letter released Monday.

That puts the state in peril, the letter warned: State taxpayers may have to foot the bill if the federal money can't be recovered from those who improperly received or misspent that disaster aid.

"We continue to caution that the longer grant recovery is postponed, the less chance the state has to recover award payments from recipients who did not spend the money appropriately," the letter states.

Meanwhile, the report hints that the actual sum of misspent money could run significantly higher. Auditors reviewed 24 loans to property owners through the state's Small Rental Property Program, to which the state has allocated $663 million. Of the 24 cases - none of which had been flagged as problematic by the state's Office of Community Development -- six property owners, or one-fourth of the total, failed to prove they were in compliance, the report says.

As a result, state auditors added another $567,000 to the $33 million in rental property assistance that OCD has said is eligible to be recovered. But given the small sample taken on by the legislative auditor from among the more than 8,000 properties that benefited from the assistance program, the number of improper payments could be much greater.

The OCD, a wing of Gov. Bobby Jindal's Division of Administration, identified the $116 million it has so far deemed misspent through investigations of the housing repair, rental and elevation assistance programs it manages, including the Road Home, the Small Rental Property Program and the Hazard Mitigation Grant Program.

In response to the auditor's April 10 letter, OCD Executive Director Patrick Forbes said his agency was taking a different tack toward the federal money in question. Rather than chase down homeowners to take it back, OCD intends to change its regulations and provide more assistance to the homeowners before "triggering the recapture of funds."

So far, OCD has identified $58 million that improperly went to 1,142 homeowners through Road Home, by far the biggest of the state's post-Katrina aid programs. The agency has said that about $29 million of that is a result of missteps by the program's former administrator, ICF International, and it is asking ICF to repay that sum. In addition to the $33 million OCD flagged as being improperly distributed to rental property owners, it found another $22.8 million that went to 801 possibly ineligible applicants through hazard mitigation grants.

State auditors suggested Monday that as much as $804,000 more of the $67 million hazard mitigation program money overseen by OCD could also have been improperly dispensed or misspent.

The legislative auditor's letter was a follow-up to a scathing report in April 2012 that found many of the same problems and a host of others, including potential misuse of state-issued credit cards; the Office of Coastal Restoration and Protection's lack of a written policy to prevent the hiring of contractors barred by the federal government; and inaccurate financial reporting by the Office of Planning and Control. Monday's letter states that the problems with credit cards, hiring contractors and poor financial reporting had been cleared up, but that any money lost through OCD's hurricane recovery programs remains a major unsolved problem for Jindal's administration.

The new audit refers to problems with the OCD's federally financed programs between July 1, 2011 and June 30, 2012. In each case, auditors examined a swath of participants in certain programs and used those findings to extrapolate the potential breadth of the misspending.

OCD has said that it will seek to recoup money first from those accused of fraud, receiving duplicated benefits or taking rebuilding money only to demolish a dwelling. Auditors also noted that OCD is expected to submit plans to reform its management policies to the U.S. Department of Housing and Urban Development by June 30.

But to date, little or none of the misspent money has made its way back onto the state agency's balance sheets. That makes the auditors nervous.

"Although the department is actively working with HUD to resolve compliance issues, we would like to reemphasize that the longer program regulations are modified and enforcement actions delayed, the less chance the state has to recover award payments from recipients that did not spend the money appropriately, and the state could be liable to repay those funds to the federal government," their letter repeats.

Editor's Note: A previous version of this story incorrectly indicated that
a legislative auditor's report had cited the state Office of Coastal
Restoration and Protection, which is now known as the Coastal Protection and
Restoration Authority, for improperly hiring contractors that had been banned
by the federal government. Instead, that 2012 report stated the CPRA didn't
provide evidence in five cases that it had not hired federally banned
contractors, and that the state agency didn't have a written policy to prevent
the practice. This story has been corrected above.